To stick to terms of agreement with friends

Agreed. These one person companies are easy to close down, taking the clients to another company you 100% own and paying any assets out of the company via salary /bonus.

It's huge risk here -agreeing to sell at a compromise rate between investment cost and the 5x value is probably your best bet unless the contract has sone very iron tight non compete clauses for her.

No, it isn't. The value of the business if sold to an unrelated party (the fair market value of the business) is absolutely relevant to the value of OP's interest when bought out.

It does seem very unfair that her (large majority) 80% is now worth 5 times as much, when she wouldn't have any more than her original few thousand capital if you hadn't invested heavily in it and enabled her to benefit from that huge increase - if she's going on her own 'reasoning'. Or has she conveniently overlooked that part?

Why not offer to buy her 80% stake in the business - obviously paying a tiny bit more for 80% of its current value than what 80% of it was worth originally. Well, those are her rules.

Has she ever owned a house and then sold it after a number of years? Did she refuse to accept more than a few percent over the price that she originally paid, or did she take every penny that the current market then yielded for it? I doubt it, somehow...

Business is business. Obviously you are right here. Your initial investment allowed her to create and grow the business. It was structured professionally with legal agreements.

But the problem is friendships are involved and sadly this often muddies the water as you are currently experiencing. Friends often have unrealistic expectations based on emotions rather than a business transaction. She’s obviously in that category.

I hope that you can resolve this, obviously without reducing your expectations of investment uplift. I doubt now that any friendship between the two of you or your children will survive though.

I run my own business and have learnt in the past business and friends don’t mix. Sorry that you’re currently experiencing the same.

Quite. So the only way she regards it as a loan is if she regards it as an interest free loan.

The relevance is can this woman sabotage the company by leaving and make it just about worthless, if she’s mad enough about this.

I know someone that’s just revived £10m for a silent 50% share. That’s the way it works.

That's irrelevant. The OP made an investment for 20% of the company, that is a legal agreement.

You've said the business was her idea and she does all the labor - does the business have value without her? If she were to stop working tomorrow, would your share actually be worth 5x your investment if the business were sold to an outside party?

It’s not demanding ffs.

the business will need to be valued and if it’s gone up in value then the OP will be paid what she’s owed. Don’t forget to value the “goodwill” of the business OP and good luck!

Fingers x you get a sensible outcome here OP but I do fear that this person is sufficiently stupid to actually burn the thing to the ground, cutting off her nose to spite her face, rather than pay out what you're actually due!

If the value of the business has gone up x5 then why not? The other woman’s shares have gone up 5x and so have OP’s. That’s literally what investing is for. The op can sell her shares or not sell her shares, unless she has a clause that stipulates otherwise, but this woman can’t just force her to give her shares for less than what they’re worth. And why should she?

op, you definitely should take the value of your shares now. Don’t feel guilty or whatever. Just go through lawyers and get out asap as she sounds like a nut job. BUT don’t say things like “she’s put close to nothing in” or whatever you said because when you’re the one to work on a business and your bring, times, sweat, tears, contacts, thought, skills, talents and/or whatever else, you are contributing just as much if not more than money. When you say this it makes you sound dismissive of her achievements and will no doubt piss her off majorly. Using a stay at home mum analogy - You pay for the baby, but she rears the baby. Both equally important, just different, roles.

I can’t believe she’s letting this effect your daughter, she was never a friend in the first place, it sounds like she’s just an arse anyway and was the one in the wrong but even if she wasn’t you don’t allow it to impact on others children no matter how mad you are with the person. Her entitlement it’s just another level.

Don’t let her win OP! You’ve got this!

Also if she was to “out” you on social media make sure you’ve documented everything she’s done so far then you can not only sue her for it but also show the world you weren’t the A-hole and her all lovey dovey social media presence will be shattered.

Christ, what does she think Private Equity does. What a twat.

Just Be careful she doesn’t phoenix

I am so glad to read that you’re sticking to your guns and going for what you are rightfully entitled to. Anything less would be, in my opinion, foolish. In these circumstances she isn’t your friend, she is a business partner, and the situation should be treated as such. Anyway, it sounds like your friendship is over as it stands sadly.

I feel like she doesn't understand what an investment is...it wasn't an interest free loan.

Well done you on a good investment 👍

stick to your guns!! without you she would have nothing!!!

shes a nasty bitch involving your daughters!!

@Bungybungy Without you there would be no business to begin with

Business aside, which you are totally in the right about, you were a good friend who helped her when she needed it. She has thrown that back in your face. She doesn't sound like a very nice person at all, very entitled judging by your updates. Stick to your guns and wash your hands of her once you get your money.
If she tries to "out" you she has no valid reason, and we know how fickle social media is, if people find out the truth she'll be out of favour and deemed untrustworthy.

So sad to be so money-mad. She must have lost it when she got the solicitor's letter.
But she can decide to not distribute dividends, so OP is better out.

Threatening your reputation if you don't give her what she wants? Isn't that a criminal offence?

Stick to your guns, unbelievable to involve your children. Fuck that shit. I’d now refuse to sell and keep raking in the yearly dividends as company director.

This 'friend' appears to be blackmailing you, very unethical and unfair. Stick to your guns for what is legally yours. You were honourable enough to take the risk of giving her the money to enable her to start the business. Completely naïve of her to think that she doesn't have to give you 20% of profits now.
This is rightfully yours

So pleased she's getting the letter today to stew over the weekend !

It just goes to prove that the love of money is the root of evil. Even if she genuinely thinks you’re in the wrong she shouldn’t be involving the children in it.

She can’t surely just think you’re asking for something you’re not entitled to? If she agreed to something she didn’t understand or she didn’t take an option that in hindsight would’ve been better for her, then that’s a shame, but she made her choice and now she has to live with it.